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#wct futuresFocus on Infrastructure Projects: WCT is shifting its strategy to prioritize infrastructure projects over building construction. This aligns with anticipated government initiatives and potentially offers higher margins. They aim to rebalance their order book to 70% infrastructure and 30% buildings, a significant change from their end-2022 mix of 35% local civil and infrastructure and 65% local buildings.
* Active Tender Book: WCT maintains a strong tender book exceeding RM13 billion, primarily comprising civil and infrastructure jobs (92.3%) and housing-related projects (7.7%). Key bids include the Penang International Airport expansion, Pan Borneo Sabah, and expressway works. They are also exploring opportunities for data center projects.
* REIT Listing: A significant catalyst for WCT is its proposed Real Estate Investment Trust (REIT) listing, which will include three of its retail malls. This move is expected to unlock asset value, enhance financial flexibility by raising funds, and help pare down its high borrowings. The prospectus for Paradigm REIT was reportedly dispatched in May 2025.
* Debt Reduction: WCT is actively working to reduce its debt. The proposed REIT listing and a private placement of shares (aiming to raise up to RM163 million, with RM50 million allocated for debt repayment) are part of this de-gearing initiative, aiming to bring the gross gearing below 0.60 times.
* Overseas Diversification: WCT seeks to diversify its revenue streams by expanding overseas, aiming for 15% of revenue from international jobs, particularly in the Middle East. They also target 20% from Borneo Island, including Kalimantan.
* Property Development and Investment: The company's property development and investment segments are performing well, with 2024 property sales hitting RM1 billion. They also anticipate stronger performance from their retail malls due to high occupancy rates and increased footfall.
Financial Performance and Projections:
* Analyst Outlook: Analysts generally hold an optimistic view of WCT, with many maintaining "buy" calls despite some mixed views on near-term earnings visibility and construction margins.
* Earnings and Revenue: While there have been some downward revisions to earnings forecasts for 2025 and 2026 due to lower-than-expected job replenishment in 2024 and adjusted margin assumptions, WCT's financial performance in 2024 showed a rebound, driven in part by non-recurring gains.
* Order Book: As of December 31, 2024, WCT's outstanding order book stood at RM2.3 billion, representing 2.2 times its 2024 construction revenue, providing some earnings visibility.
* Debt Levels: As of December 31, 2024, WCT's borrowings were RM3.58 billion, with a net debt-to-equity ratio of 0.80 times. The company is actively pursuing initiatives to reduce this.
Challenges and Considerations:
* Margin Pressures: The engineering and construction segment continues to face margin pressures from project delays and rising costs of materials and labor.
* Job Replenishment: While improving, new job replenishments still need to provide stronger earnings visibility.
In summary, WCT is actively pursuing a strategy focused on infrastructure projects, asset monetization through a REIT, and debt reduction. While facing some challenges in construction margins, the company's strong tender book and diversification efforts point towards a proactive approach to growth and improved financial stability in the future.
FUTURE